2022 (10) TMI 441 - AAR - Customs

Classification of goods - HDPE woven fabric - to be classified under Tariff Heading 3926 or 3923? - export of Duty Drawback scheme, rather they plan to export under Advance Authorization Scheme - HELD THAT - In Headings 39.20 and 39.21, the expression plates, sheets, film, foil and strip applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use). HDPE woven fabric is not classifiable under Headings 39.20 and 39.21. Heading 3923 covers Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics. It includes sacks and bags (including cones) under Heading 3923 10; Stoppers, lids, caps and other closures under Heading 3923.50; and residual entry others under 3923.90. The explanatory notes to this heading further explain that this heading covers all articles of plastics commonly used for the packing or conveyance of all kinds of products - A careful reading to this heading suggests that HDPE woven fabric is not covered under this heading, in particular under the expression under closures. Further, since the fabric is in roll form, even though it can be used to make bags or sacks, following the settled principle of law, the classification of the article should be based on the form it is presented in, and therefore, cannot be classified under Heading 3923 10. Heading 3925 covers Builders ware of plastics, not elsewhere specified or included. Even though the applicant has contended that the fabrics are those which are used to cover buildings under construction, they cannot be considered as builder s ware of plastics, taking into account the Explanatory Notes of HSN and description of the articles mentioned in the heading/sub-heading - residual Heading 3926, covering Other articles of plastics and articles of other materials of Headings 39.01 to 39.14. This heading covers articles, not elsewhere specified or included, of plastics (as defined in Note 1 to the Chapter) or of other materials of Headings 39.01 to 39.14, noting that HDPE in its primary form is covered under Heading 3901. HDPE woven fabrics (uncoated/one-side coated/double-side coated) are most appropriately covered under residual Heading 3926 and further the residual sub-heading 3926 90 99 of the Customs Tariff Act, 1975.

Summary

Issues Involved:

1. Classification of High Density Polyethylene (HDPE) woven fabric (uncoated, single-side coated, and double-side coated) under the Customs Tariff Act, 1975.
2. Determination of the appropriate Customs Tariff Heading for HDPE woven fabric for export and import purposes.

Issue-wise Detailed Analysis:

1. Classification of HDPE Woven Fabric:

The applicant, M/s. Harmony Plastics Pvt. Ltd., sought an advance ruling on the classification of HDPE woven fabric (uncoated, single-side coated, and double-side coated) under the Customs Tariff Act, 1975. They argued that HDPE woven fabric should be classified under Heading 3926, specifically under sub-heading 3926 90 99, as it falls under "Other articles of plastics." The applicant contended that there is no specific mention of HDPE woven fabric under Headings 3901 to 3925. They also cited several judgments, including the Gujarat GST Advance Ruling Authority and the Madhya Pradesh High Court, to support their classification under Heading 3926.

2. Determination of the Appropriate Customs Tariff Heading:

The concerned Commissioner of Customs argued that HDPE woven fabric should be classified under Heading 3923, specifically under sub-heading 3923 10 90, which covers "Articles for the conveyance or packing of goods, of plastics." The Commissioner contended that the inclusive nature of Heading 3923, which includes sacks and bags, implies that fabrics of all types of plastics should be classified under this heading. The Commissioner also referenced the Duty Drawback Rates, which classify HDPE woven fabrics under Tariff Item 3923.

Analysis and Ruling:

Upon examination, the Authority for Advance Rulings noted that the applicant sought classification for both import and export purposes. They clarified that the ruling would not cover the Second Schedule of the Customs Tariff Act or Duty Drawback rates, as requested by the applicant.

The Authority analyzed various headings under Chapter 39, including Headings 3920, 3921, 3923, 3925, and 3926. They concluded that HDPE woven fabric does not fit under Headings 3920 and 3921, which cover plates, sheets, film, foil, and strip. Heading 3923, which covers articles for the conveyance or packing of goods, was also deemed inappropriate because the fabric is presented in roll form and not as sacks or bags.

Heading 3925, which covers builders' ware of plastics, was also ruled out as HDPE woven fabric does not fit the description of articles under this heading. Finally, the Authority determined that Heading 3926, which covers "Other articles of plastics," was the most appropriate classification. They noted that the Explanatory Notes to Heading 3926 include dust-sheets, which are used to cover buildings under construction, aligning with the applicant's description of the fabric's use.

Conclusion:

The Authority ruled that HDPE woven fabric (uncoated, single-side coated, and double-side coated) should be classified under residual Heading 3926 and further under sub-heading 3926 90 99 of the Customs Tariff Act, 1975. This classification was deemed appropriate based on the detailed submissions, the likely usage of the article, and the absence of a specific heading/sub-heading for HDPE woven fabric in Chapter 39.